October 5, 2016

More Hits to 3Q16 GDP: Trade Deficit Increases, Factory Orders Drop

Filed under: Economy,Taxes & Government — Tom @ 10:40 am

Today’s 8:30 a.m. trade report from the Census Bureau was not helpful for third-quarter GDP:

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that the goods and services deficit was $40.7 billion in August, up $1.2 billion from $39.5 billion in July, revised.

Expectations were for a deficit of $39.1 billion. The monthly trade deficit has been creeping upward for several months.

The news from the Census Bureau at 10 a.m. on Factory Orders, Shipments and Inventories was even worse:

New orders for manufactured goods in August, up two consecutive months, increased $0.7 billion or 0.2 percent to $453.1 billion, the U.S. Census Bureau reported today. This followed a 1.4 percent July increase.

Shipments, up five of the last six months, increased $0.1 billion or virtually unchanged to $458.1 billion. This followed a 0.4 percent July decrease.

… Inventories, up two consecutive months, increased $1.0 billion or 0.2 percent to $622.0 billion. This followed a 0.2 percent July increase. The inventories-to- shipments ratio was 1.36, unchanged from July.

The inventory increase will protect GDP a bit, but the orders and shipments numbers won’t. July’s originally reported orders increase was +1.9 percent, and now it’s 1.4 percent. The reported August increase of 0.2 percent leaves seasonally adjusted orders ($453.1 billion seen above, and seen here) well below July’s original figure of $454.8 billion.

Zero Hedge notes that this month’s year-over-year orders decline, the 22nd in a row, is “by far the longest streak of contraction in US history and obviously has never before occurred without a US recession.”

As to shipments, July’s 0.2 percent decrease was revised to -0.4 percent, and, as with orders, August’s seasonally adjusted value of $458.1 is below the $458.9 billion originally reported in July.


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